Is Lotus Being Sold To The Chinese?

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Geely now has its sights solely on Lotus, while the PSA could be acquiring Proton.

Rumors that Chinese company Geely, which owns Volvo, were interested in forming a technical partnership with Proton have been circulating for a while now. Since Proton owns Lotus, we speculated that a potential partnership could lead to some Lotus-tuned Volvos in the vein of the Lotus Carlton. However, a report by The Star Online suggests that Geely isn’t interested in Proton after all. Instead, it has its sights on Lotus. Proton, on the other hand, could be acquired by French firm PSA, which produces Peugeots and Citroens.

“PSA is ready to invest a lot of money in Proton and build a new plant in Tanjung Malim, Perak. It has presented the best proposal to rescue and expand Proton’s operation in Asean,” a source told The Star Online. Geely was also in the running to acquire a 51 percent stake in Proton, but is apparently now planning a proposal to take over Lotus Cars from Proton. “Proton is of no use to Geely. It wants Proton because of the auto technology in Lotus. And for PSA, which is strong in sport-utility vehicles, it is not keen on Lotus,” the source said. The auto industry is seen as a weak segment in China’s manufacturing sector.

As a result, the government has been encouraging auto companies to acquire technology that it lacks. The PSA is also proposing to move Proton’s Shah Alam plant to its under-used plant in Proton City in Tanjung Malim, as well as raising the production capacity of Proton’s cars to one or two million – a significant rise from the 150,000 cars currently produced by Proton. It also proposes to produce SUVs for theAseanmarket. “PSA is a latecomer in this region. Now it sees the opportunity to penetrate theAseanmarket of 600 million people by using Malaysia as a base to export its vehicles tax-free to any of the 10Aseanmembers,” the source said.

Proton is expected to announce its new technical partner or possibly a new owner within the first half of this year. It’s no secret that Lotus has been struggling financially, but we weren’t expecting Geely to be a potential buyer of the British sports car manufacturer. Lotus expanding its engineering expertise can only be a good thing - Volvos could get more exciting to drive.